Emerging Technologies Washington Update

Week in Review

With the December 21 deadline looming to fund remaining areas of government for FY19, congressional Democratic leaders traveled to the White House on Tuesday to discuss the parameters of an end of year spending package. In a heated public meeting, the President and Leaders Schumer (D-NY) and Pelosi (D-CA) argued over the President’s request for $5 billion to build a border wall, with Trump claiming he would be “proud” to (partially) shut down the government if the request goes unfulfilled. Congressional leaders are now weighing options to avert or minimize the shutdown threat, including potentially separating the FY19 DHS bill from the other remaining measures, including Transportation-Housing and Urban Development and Commerce-Science-Justice.

Elsewhere, the Senate voted 87-13 on Tuesday to adopt the $867 billion farm bill conference report. The House followed suit Wednesday, 369-47, sending the bill to the President for his signature. Today, the Senate votes on a resolution to withdraw US support from Saudi Arabia’s efforts in Yemen’s civil war. Support for the measure grew after journalist Jamal Khashoggi’s murder, but it is unlikely to come to the House floor and the Administration opposes the measure and has threatened a veto.

Senator Maria Cantwell (D-WA) confirmed this week that she will assume the top Democratic seat on the Senate Commerce, Science, and Transportation Committee, succeeding outgoing Ranking Member Bill Nelson (D-FL). Under incoming Chairman Roger Wicker (R-MS), the Committee is expected to focus at the outset on developing a federal consumer privacy framework, building on a series of hearings this year during which lawmakers heard from the private sector, consumer advocates, and those involved in developing the EU’s GDPR and the California Consumer Privacy Act (CCPA). For more on committee leadership changes and agendas for the 116th Congress, click here.

Reps. Darren Soto (D-FL) and Ted Budd (R-NC) introduced legislation this week to promote US competitiveness in the global virtual currency marketplace. The bill defines virtual currency as “a digital representation of value that does not have legal tender status and that functions as a medium of exchange, a unit of account, or a store of value” and directs the Commodity Futures Trading Commission (CFTC) to produce a report on the state of virtual markets and ways to promote American competitiveness. Soto, Budd, and Rep. Bonnie Watson Coleman (D-NJ) also introduced a consumer protection-focused measure that orders a CFTC report on promoting fair and transparent virtual currency markets by examining the potential for price manipulation. Both bills are representative of the increasing importance of and congressional interest in both promoting and regulating financial technologies.

The Week Ahead

Looking ahead, congressional leaders will continue to focus on averting a partial government shutdown at the end of next week as lawmakers look to leave town for the holidays. The Senate is also planning to take up criminal justice reform legislation endorsed by the President.

Google CEO Sundar Pichai Appears Before House Judiciary Committee

On Tuesday, the House Judiciary Committee held a hearing entitled “Transparency and Accountability: Examining Google and its Data Collection, Use and Filtering Practices” that featured testimony from Google CEO Sundar Pichai. This was the third Committee hearing this year on the content censorship and filtering practices of dominant digital platforms. Republican members reiterated arguments that Google, along with Facebook and Twitter, is guilty of suppressing conservative content. Members questioned Pichai on how Google develops search algorithms, as well as its advertising practices. Some also suggested Congress should institute stricter regulations for the technology industry and reform Section 230 of the Communications Decency Act to prevent safe harbor protections for companies guilty of biased censorship practices.

Similar to previous hearings, Democratic members refuted Republican claims that technology companies suppress conservative content. They called upon the Committee to focus instead on issues related to marketplace competition, consumer privacy, and digital advertising. Ranking Member Nadler (D-NY), who will take the gavel in the next Congress, indicated the Committee will prioritize these issues in the coming year, rather than focus on allegations of biased filtering practices. Other Democrats questioned Pichai on the prospects of a federal consumer privacy framework and implications of the European Union’s General Data Protection Regulation (GDPR).

Committee members shared little common ground during the hearing, but agreed on issues related to Google’s location tracking practices and potentially launching a search engine in China. While Pichai denied that Google has any immediate intentions to establish a search engine in China, he did not rule out the possibility in the future, which drew criticism from both sides of the aisle. With regard to location tracking practices, members agreed that consumers lack the necessary information to control user settings on Google’s platforms and criticized the company for failing to educate the public.

FTC and DOJ Officials Discuss Approach to Antitrust Enforcement Before House Judiciary Committee

Yesterday, the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a hearing entitled “Oversight of the Antitrust Enforcement Agencies.” Assistant Attorney General for Antitrust Makan Delrahim and Federal Trade Commission Chairman Joseph Simons appeared before the committee and answered questions regarding the Administration’s efforts to ensure marketplace fairness and competition across economic sectors.

Several lawmakers questioned how the Department of Justice (DOJ) and Federal Trade Commission (FTC) can improve review procedures and oversight of industry. Both Chairman Simons and Assistant Attorney General Delrahim assured the committee that the DOJ and FTC are in close communication to ensure merger reviews and other investigations are conducted efficiently. Lawmakers also discussed the efficacy of reforming existing antitrust law, but the committee failed to reach consensus as to whether reforms are necessary. Full Committee Chairman Goodlatte (R-VA) expressed concern that elimination of the consumer welfare standard could detract from objective economic analysis and subsequent regulations. Conversely, Ranking Member Nadler (D-NY) argued that reform to existing law is sometimes necessary to maintain sufficient oversight of the evolving economic environment.

Committee members also discussed issues related to the health care, music, and technology industries. Both Republicans and Democrats acknowledged that many industries have become heavily consolidated and pose a threat to consumers. Echoing his remarks during the Tuesday hearing with Google CEO Sundar Pichai, Chairman Goodlatte (R-VA) raised concerns with the perceived bias in content filtering practices of dominant technology companies. He suggested that increasing competition in the technology industry could mitigate this issue rather than making digital platforms a public entity. Subcommittee Ranking Member David Cicilline (D-RI) noted in his opening statement that the United States is “in a monopoly moment” and characterized the economy as working poorly for many Americans. His Democratic colleagues issued similar statements, and several members drew attention to the effects mergers have upon the labor force.

FTC Seeks Comments on Identity Theft Rules

The Federal Trade Commission (FTC) published in Tuesday’s Federal Register a request for comment on its Identity Theft rules. At this time, the FTC is not proposing any changes, but rather seeks comments as part of its systematic review of all FTC rules and guidance. The Identity Theft rules are required by the 2003 Fair and Accurate Credit Transactions Act (FACTA), section 114 of which amended the Fair Credit Reporting Act (FCRA). The Identity Theft rules include a Red Flags rule and a Card Issuers rule. The FTC is seeking comment on a number of general and specific issues enumerated in the Federal Register notice, including the economic costs and benefits of the rules, any potential conflict with other Federal, State, or local laws or rules, and what effect technological, economic, or other industry changes may have on the rules. Comments are due by February 11, 2019.

Senator Schatz Introduces New Consumer Privacy Measure

This week, Senator Brian Schatz (D-HI) - Ranking Member of the Senate Commerce Communications, Technology, Innovation, and the Internet Subcommittee - joined 14 Democratic Senators to introduce the Data Care Act, new consumer privacy legislation that would set duties for online service providers aimed at protecting user data. The proposed legislation seeks to hold providers responsible for protecting consumer rights and preventing exploitation. Under the framework, providers would be responsible for securing individual identifying data, informing consumers of data breaches, guaranteeing data is not used in ways that harm consumers, and ensuring that third parties are following the same standards, among other duties. Further, the legislation grants the FTC rulemaking authority to implement the Act. A number of consumer advocacy groups lauded Senator Schatz for introducing the legislation, including Free Press Action, the Center for Democracy and Technology, and the Electronic Frontier Foundation (EFF). Introduction of the Data Care Act comes amid heightened focus on consumer privacy in both chambers, which will undoubtedly remain a top priority in the 116th Congress.